City news: G4S, manufacturing, commercial property market

G4S is expected to update the City on the progress of its debt reduction plans this week when the outsourcing giant will post its half-year results.

PUBLISHED: 17:53, Sun, Aug 7, 2016
| UPDATED: 18:10, Sun, Aug 7, 2016

GETTY

G4S has been looking to shore up its balance sheet by winding down “onerous contracts”

The world’s biggest security company has been looking to shore up its balance sheet by winding down “onerous contracts”, disposing of loss-making businesses and driving down its debts, which hit £1.782billion at the end of December last year.

However, the company may be in line for a setback if it takes a hit from the recent collapse in the pound.

The company is expected to deliver a profit before interest, tax and amortisation of between £185million and £205million for the first half of the year, boosted by growing demand for security work following a spate of overseas terrorist attacks.

Related articles

G4S said in May that it had recorded a positive start to the year after revenues rose 4.5 per cent in the first quarter to £1.5billion.

Graham Spooner, investment research analyst at The Share Centre, said: “The share price has remained under pressure over the past year. “Investors will be hoping that in an unsettled world, demand for security work is unlikely to fall significantly.”

----------------------------------------

Overseas investors flock to Britain post-Brexit vote

Foreign buyers are swarming London’s commercial property market as they look to capitalise on the fall in sterling following the EU referendum, with Asian and US investors at the front of the queue.

Property giants CBRE and Colliers have both seen a surge of interest from buyers from as far afield as South Korea and Taiwan as the value of the pound continues to drop, with London still seen as a “safe bet”.

Miles Gibson, head of UK research at CBRE, said: “There is strong interest from US and Asian investors because of the weaker pound.

“What is interesting about the Asian investors is that it’s a very diverse range of nationalities that are expressing an interest.

South Koreans, Taiwanese, Malaysians and Singaporeans are all in there.

They tend to be interested in prime central London office space as they see it as a safe bet – good long-term income with their capital preserved.

“Brexit hasn’t altered the idea of it being a safe bet because the fundamentals haven’t changed: London still excels when it comes to financial services, transparency, languages and universities.”

Office blocks in central London are the biggest lure to investors, and the Asian inquiries come as property experts believe the currency fall will also fuel investment in the capital from established players in North American and the Middle East.

----------------------------------------

Companies’ credit crunch ‘hangover’

Manufacturing is suffering a “persistent hangover” from the credit crunch, which could be hitting investment in the crucial sector of the economy, according to a report.

The EEF said most manufacturers were confident of securing finance, but only a third were more likely to use finance than they were two years ago.

GETTY

Manufacturing is suffering a “persistent hangover” from the credit crunch

Just over half of firms were holding more cash on their balance sheets compared to pre-recession levels, said the manufacturers’ organisation.

The report raised concerns that companies were “shunning” banks in favour of self-financing investment projects, potentially leading to lower investment levels.

The EEF said the Competition and Markets Authority’s final recommendations on the competition failures affecting retail banking services for smaller firms, due out tomorrow, must “pack enough punch to stop the rot”.

Lee Hopley, the EEF’s chief economist, said: “Whether the next recession is in one year or 20 years’ time, the problems in this vital market must be fixed. “Manufacturers must have access to finance – progress needs to be seen.”